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Many organisations’ impressive new digital apps are underpinned by slow and cumbersome backends

The dollar value of the digital transformation market is impressive indeed. IDC’s January 2016 report suggests that worldwide spending on digital transformation technologies is growing at around 17% pa to reach over $2.1 trillion by 2019.

However, it is clear that this spending is not uniform across enterprises’ digital infrastructure. While mobile app development tends to receive the lion’s share of an enterprise’s attention, the focus on back end improvements, such as in data security and data integration, appears to lag. For example, a 2016 Gartner survey found that of the enterprises expecting to increase their mobile app spending by an average of 30%, their overall mobile budget was only expected to grow by 10% over the same period.

This trend is worrying for several reasons. Outdated and disjointed systems run a greater risk of failures and security breaches. And coupled with the rapid release of new digital channels, any malfunction is likely to have a wider, more immediate and higher profile impact on customers.

However, system disconnects are not wholly related to cost. Here we look at three underlying reasons for an enterprise’s mismatched IT growth.

The two-speed approach: Inevitable… and useful?

Firstly, the process of digitisation has caused a shift in the enterprise IT decision-making process. According to a Bain & Company 2014 survey, nearly one third of technology purchasing power has migrated from CIOs and technology teams to business stakeholders.

This shift in power and accountability is in line with the need to respond promptly to customers’ fast changing digital preferences. As a result, business stakeholders and marketing executives are now better able to make “quick fixes” to customer-centric apps and digital channel features, without waiting to ensure long term alignment with back-end systems. Some business stakeholders even resort to “Shadow IT” ie new technologies not yet sanctioned by their IT teams.

The consequence of this is a “two-speed” IT infrastructure. Despite the risks, this is a situation some analysts would deem inevitable and even desirable, in order to ensure that customer experience demands are met without delay. The problem starts when, having been launched, interest in the project wanes in favour of the next big thing. Under such circumstances, neither business owners nor IT teams work to ensure that back-end systems “catch-up” and are able to sustainably support front-end innovation. The lesson here is that a two-speed approach is acceptable, but only if the arrangement is temporary.

Which comes first: the skills or the project?

Another weak link in the synchronisation of front and back end systems development is the prevailing skills shortage. According to a survey of 2,600 CIOs conducted by Gartner, the biggest obstacle to digital transformation is the lack of technology talent. In fact, so deep is the crisis that, according to Gartner, of 1.4 million computer specialist job openings in 2020 projected by U.S. Department of Labour, there are not enough qualified graduates to fill even about 30 percent of these jobs.

So which IT sectors are most affected? While front end and back end developers are equally in vogue, the key need is to bring the two together. Across a variety of HR surveys, project management and solutions architecture are among the top five most hard-to-find IT skills today. These skills encapsulate the ability to scope out a business need, dimension it, identify the frontend solution, and manage its backend delivery.

While enterprises remain committed to launching new digital offerings, this shortage is dampening their enthusiasm for large scale IT upgrades. Albert Ellis, CEO of the Harvey Nash Group, notes that, “In the past, CIOs would set their IT strategy first, followed by a resourcing plan. Now, it’s all changed. Certain skills are in such demand IT executives are facing up to the reality there’s no point in having the right technology platform if you don’t have the right people to build and support it.”

The solution, suggests HR specialists, is to focus on access rather than ownership. In a world undergoing digital tansformation, a business model that relies only on inhouse talent appears to no longer be tenable. The question then is where, not whether, to locate external talent.

Embedding new technology: Out with the old?

A third barrier to back end IT growth is the difficulty in incorporating new technology into existing enterprise infrastructure. While front ends can be created afresh, back end upgrades are often a question of merging the old and the new. Which is no easy task. It is perhaps not surprising that a new A.T. Kearney report found that the failure to integrate new technologies with legacy systems was cited by 59% of respondents as the reason they were not able to achieve their digitisation plans.

This is driving enterprises to find creative solutions to the problem. One way is for them to adopt new platforms altogther by leveraging on cloud computing services such as PaaS (platform as a service). This service means enterprises are free to develop their own apps, while PaaS vendors provide the key backend tools such as hosting, operating systems, databases, etc, needed to support such applications. Today the global market for PaaS is projected by Global Industry Analysts to reach USD 7.5 billion by 2020, with Asia Pacific the fastest growing market at a projected CAGR of over 20%.

Of course, enterprises that have spent large amounts on their back systems will find this solution harder to swallow. However, many are using application programming interfaces (APIs) to leverage on new software components that have been developed internally and externally. According to one study, 67% of “digital disruptors”, that is, enterprises most successful at their digital transformations, put a high emphasis on the managed use of modern APIs techniques, standards and protocols to integrate their front and back end systems.

Over the next few years, there is likely to be a concerted shift of focus from already polished digital interfaces to an equally polished back end infrastructure. Turning digital offerings into primary profit drivers is unlikely unless enterprises also deliver data security, operational efficiency, and processing speed.